Commissioner Of Income Tax - 9 v. M/S. Growing Mercantile Pvt Ltd

RMA IN THE HIGH COURT OF JUDICATURE AT BOMBAYO.O.C.J. INCOME TAX APPEAL NO. 1213 OF 2010 Commissioner of Income Tax - 9 .. Appellant Vs M/s. Growing Mercantile Pvt Ltd .. Respondent Mr. Suresh Kumar for the Appellant Ms. Beena Pillai a/w Mr. Neeraj Punmiya for the Respondent CORAM : J.P. DEVADHAR & A.A. SAYED, JJ. P.C.: DATE : 18th JULY, 2011. 1. Three questions of law raised by the revenue in this Appeal which reads thus:which reads thus: a) Whether on the facts and in the circumstance of the case and in law, the Hon'ble Tribunal was justified in deleting the disallowance of referred fees of Rs. 4,41,88,724/- paid to its sister concerns namely M/s. Strategic Capital Corporation and M/s. Colva Trade Place Pvt Ltd ignoring the facts that no details were filed before the Assessing Officer or Ld. CIT(A) and there was neither any response from the sister concerns to the summons issued by the Assessing Officer nor any evidence was furnished in and in law, the Hon'ble Tribunal was justified in deleting the disallowance of referred fees of Rs. 4,41,88,724/- paid to its sister concerns namely M/s. Strategic Capital Corporation and M/s. Colva Trade Place Pvt Ltd ignoring the facts that no details were filed before the Assessing Officer or Ld. CIT(A) and there was neither any response from the sister concerns to the summons issued by the Assessing Officer nor any evidence was furnished in support of the commercial expediency / services rendered by the recipients? b) Whether on the facts and in the circumstances of the case and in law, the Hon'ble Tribunal was justified in deleting the disallowance of referral fees of Rs. 4,41,88,724/- paid to its sister concerns by holding that (para 8.2 of its ITAT order) all the details were already filed before the Assessing Officer & Ld. CIT(A) and they were taken into consideration whereas no such details / evidences as called for were filed before the Assessing Officer & Ld CIT(A) as mentioned by them in their orders?case and in law, the Hon'ble Tribunal was justified in deleting the disallowance of referral fees of Rs. 4,41,88,724/- paid to its sister concerns by holding that (para 8.2 of its ITAT order) all the details were already filed before the Assessing Officer & Ld. CIT(A) and they were taken into consideration whereas no such details / evidences as called for were filed before the Assessing Officer & Ld CIT(A) as mentioned by them in their orders? c) Whether on the facts and in the circumstances of the case and in law, the Hon'ble Tribunal was justified in deleting the disallowance of interest of Rs. 74,29,054/- under section 36(1)(iii) of the I.T. Act ignoring the fact that the assessee paid interest @ 24% per annum to its related concerns on the loans accepted from them whereas it charges interest @ 12.75% (average rate) on the loans advanced by it meaning thereby that the excess interest paid to the sister concern @ 11.25% was for non-business purpose?case and in law, the Hon'ble Tribunal was justified in deleting the disallowance of interest of Rs. 74,29,054/- under section 36(1)(iii) of the I.T. Act ignoring the fact that the assessee paid interest @ 24% per annum to its related concerns on the loans accepted from them whereas it charges interest @ 12.75% (average rate) on the loans advanced by it meaning thereby that the excess interest paid to the sister concern @ 11.25% was for non-business purpose? 2. As regards questions (a) and (b) are concerned, the dispute is 2. As regards questions (a) and (b) are concerned, the dispute is whether the ITAT was justified in deleting the disallowance of referral fees of Rs. 4.41 Crores paid by the assessee to its sister concern. The Assessing Officer disallowed the claim on the ground that in spite of the notice issued, none from the sister concern of the assessee appeared before the Assessing Officer. The Tribunal has recorded a finding of fact that the services were in fact rendered to the assessee by its sister concern and that details of services rendered by the sister concern to the assessee were also placed on record. In these circumstances, ITAT held that payments made for the services rendered cannot be disallowed. The decision of the Tribunal is based on facts and no question arises from the order of ITAT. Hence, questions (a) and (b) cannot be entertained. 3. As regards question (c) is concerned, the Tribunal has recorded a finding of fact in paragraph 12 of its judgment to the effect that the assessee was having no assets, no bank limits, no financial background and no credit worthiness and in these circumstances had no option but to obtain the fund from the principal subject to referral fees @ 95% plus interest @ 24% on the amount of invested funds. The Tribunal has recorded a finding of fact that after obtaining the above loan facilities then only the assessee could start its business activities. In these circumstances, question (c) cannot be entertained. The Appeal is dismissed with no order as to costs. [ A.A. SAYED, J ] [ J.P. DEVADHAR, J ]